The Affordable Care Act’s (ACA) individual mandate requiring everyone to purchase health insurance has gotten all the attention so far; but there are many more ACA mandates on the way. One was recently announced; and, potentially, it’s just as significant. After January 1 2014, all individual health plans sold must include 10 required benefits that today only 2% of plans now cover. This mandate alone will raise the cost of individual health insurance now and, eventually, affect us all.
Starting in 2014, the ACA requires all health plans sold to individuals and small group organizations and all state Medicaid plans to cover what Health and Human Services (HHS) has determined are Essential Health Benefits:
- ambulatory patient services
- emergency services
- maternity and newborn care
- mental health and substance abuse (drug and alcohol) services
- prescription drugs
- rehabilitative facilitative services and devices
- preventive and wellness services and chronic disease management
- pediatric services, including vision and dental care
HHS will also ensure that there will be no dollar limit on the amount spent on these benefits annually or within anyone’s lifetime.
As for the details under each category, HHS has asked each state to determine the amount, manner, and duration of services covered by using one of the state’s current most popular, by enrollment, health care plans as a benchmark. Any of the ACA’s Essential Health Benefits not now in the plan must be added.
So how did HHS come up with these 10 benefits? They said the health coverage benefits deemed essential would be determined by using a typical employer sponsored benefit plan as a model. But very few company plans actually include all these types of benefits; and the ones that do could not be considered ‘typical’. In fact, only 2% of all health care plans available cover all the essential health benefits, with mental health, substance abuse and pediatric services being the least covered benefits and maternity benefits falling close behind.
HHS also said the Institute of Medicine (IOM), an independent non-profit organization that provides unbiased advice to decision makers, would advise them how best to determine benefits that could be considered essential. But the Institute’s 300 page report to HHS stressed that plans must be affordable and modeled on mid-tier health plans offered by small employers. The Institute specifically warned against adding costly excessive benefits. The fear expressed in the report was that if the plans were too expensive, healthy people would rather go without costly health insurance. This would leave an insurance pool dominated by people who use more insurance than they’ve paid for which would drive up the price of health insurance still more. IOM analysts, in their report, specifically cautioned against adding any nice-to-have benefits. They compared that with a shopper who adds all the things he wants to the grocery cart; but when he has to check out, finds he doesn’t have the money to pay for it.
HHS promised, after they posted the initial list of their possible essential benefits in November 2013, they would hold ‘listening’ sessions around the country before any final decision was made. But, when the final rule concerning essential benefits was issued at the end of February, there were few changes. Over 6000 comments were received and ignored. So, again, how did they choose their mandatory list of essential benefits? Maybe it was the shopping cart paradigm they followed after all.
People spending their own money wouldn’t buy plans that include all those benefits. They’d be too expensive. What’s more, most people don’t need the insurance protection those benefits provide. The idea is to force everyone to pay for benefits only a few will need. Why is everyone paying for benefits many, if not most, people can afford to pay for themselves? Up until now, for example, most people have managed to pay for maternity expenses themselves. Truly poor people are covered by Medicaid.
In effect, when everyone’s paying, with no dollar limit, for the mental health and substance abuse treatments used by the few it becomes a subsidy on those benefits for the recipients. The cost of anything that’s subsidized goes up with the increased demand. The insurance covering these costs must go up as well. It’s an insidious cycle.
Right now, these dictated benefits are being force-fed to people who buy their own insurance and people in small groups; and states must offer these benefits to everyone on Medicaid. Right now, larger employers are exempt from compliance. However, it’s only a matter of time before they too will be forced to cover all 10 health care categories. And what stops HHS from adding still more categories? Actually, nothing.